Earlier in this blog I hazarded a prediction that 2012 would be “the year for online video”. As usual, I was a little early – it turned out to be 2015. But what a year it’s been.

The long-anticipated arrival of Netflix in the region prompted many in the traditional television business to take a good, sharp look what this might mean for their bottom lines. The prospect of vast catalogues of content available anytime, on any device and without ads – all for the equivalent of a couple of coffees a month – would naturally seem disconcerting to a business that is used to controlling what you see, when you see it and how long it takes you to see it. And which, of course, jams in up to 16 minutes of ads an hour (even if you’re paying to watch it. You know who I mean, Foxtel).

The difficulty with to responding effectively to business disruption of this kind is the risk that success poses to your existing revenue stream. This explains why the first serious catch-up TV services available online were provided by those with independent means – public broadcasters like the ABC, SBS and BBC. For everyone else, the fear is that each person who watches a TV episode online is one who doesn’t watch it on TV, and for every dollar in advertising revenue lost from broadcast only cents are recovered in online advertising. This is a trend newspapers have rued for over a decade now.

Even though they are now more universal, catch-up services all suffer from the same limitations as their bigger broadcast siblings. By its very nature, a catch-up offering only becomes available after it has been broadcast, and if it has taken six months to get from the US to Australia then most of the country has probably already downloaded it. Even once available only a few episodes can be seen at a time within the catch-up “window” (typically 7-14 days). So catch-up is still effectively “appointment-to-view”, it just doesn’t matter as much if you’re fashionably late.

Many traditional media companies (and more than a few aspirants) have, in their defence, decided to give it a go and engage their audiences in new ways before Netflix simply took those audiences from them. Although when I work with broadcasters and operators on these kinds of services I invariably find myself talking to quasi-independent “digital ventures” within the organisation whose documents are the sort that self-destruct after five seconds and whose accommodation is remote and dingy, but discreet.

But what happens when the novelty of watching whole seasons of TV shows from our youth wears off? Where will new – particularly local – content come from under this new business model? Netflix and Amazon have both demonstrated that they can commission television the equal of anything seen on a broadcast network. A promising start, but the economics of the Australian media landscape are significantly tighter, something apparently keeping ABC chief Mark Scott up at night. Describing traditional television as a “burning platform”, he wonders who will fund production of local content in the new media landscape.

And by local content he means the good stuff, not reality TV. Let it not be said that I have anything against shows like Australia’s Next Top Master Renovating Triple-Threat Factor. They just cost bugger all to make and add about as much to our cultural fulfillment.

While Mark has never had to flog ads or hammer out sponsorship deals while at the ABC, he makes an excellent point. With Netflix, Apple TV, Amazon and the like, we’re no longer just taking overseas content and putting ads around it on our own broadcasters, who might then use some of that revenue to commission local content. These new platforms control the content, the broadcast platform and – crucially – the revenue stream, lock, stock and barrel. The money may potentially get sucked straight out of the country without going anywhere near a local clapper-board.

Encouragingly, local media disruptors Stan and Presto are commissioning their own content very early in their young lives and even Netflix claims to be interested in making Australian content. It remains to be seen whether this is sustainable beyond the first flush of combat between the local guerrillas and the invading juggernauts.

I’ve been on the receiving end of a little gentle prodding from a friend who stumbled across this blog recently and insisted I resume posting. It may be a little metaphysical to write a post about the need to post, but it seems like as good a place as any to start (again).

I don’t even know where the last two years has gone. Do people even maintain blogs anymore? Or do we now confine ourselves to snarky observations of under 140 characters? Should I be posting artfully filtered snaps while pouting heavily? Although duck-face seems to have moved on to something far more aesthetic: Socality? Ostensibly a celebration of authenticity and individuality… that all looks suspiciously uniform. To the extent that even Barbie is taking the piss.

I suppose I shouldn’t rail against this apparent outbreak of narcissism. I am after all writing a blog without any evidence that my opinion is either wanted or valued. So, am I writing purely for self-aggrandisement? Have I become the very thing I’m so fond of (gently) mocking?

Perhaps self-indulgence may be closer to the mark. I maintain the conceit of a fondness for the English language and so, whether read or not, this blog is an opportunity to ply my craft (also, I’m photogenically challenged enough to rule out artful pouting on InstaTube). Under regular circumstances my use of language is purely reactionary – I know if I take too much time with a response my inbox will fill faster than I can empty it. Although I do try to make an effort to form actual sentences, a dying art in itself.

But every so often it’s nice to take the time do to things properly. In that spirit, I recently wrote an email to a colleague (actually, the boss) concerning the inability of other colleagues to for-the-love-of-god-just-send-me-the-damn-document-I-need-how-hard-can-it-be?!?

And yes, that’s exactly the tone I could have conveyed.

It was late at night and stress was preventing me from sleeping, so instead I took an hour or so to carefully draft a missive that conveyed my concern but with what I hoped would be received as genuine humour. I drew on such inspiration as a clumsy amateur could glean from the likes of Clive James, Sir Terry Pratchett and Bill Bryson. I read and re-read paragraphs, wrote and re-wrote. Utterly indulgent but at the same time extremely therapeutic.

The result was an email that was longer than it needed to be but not, I flatter myself, verbose. It was crafted and humorous but not pompous. Well, perhaps a little. But the next morning I was actually thanked for how enjoyable the email had been to read and I received that damn document just a couple of hours later.

So to the extent that you derive entertainment or edification from my blogging, I’m glad. Feel free to comment – I have a drinking game in mind which involves the use of certain words in your responses, should they come.

I was interested to note that online piracy has become a diplomatic issue in Australia, with the recently appointed US ambassador quoted in the SMH. It seems that Game of Thrones has made itself as famous for the extent to which it has been illegally downloaded as for its racy take on the fantasy genre. Nowhere more avidly than in Australia, it seems – thus the ambassador’s concern.

While I’m not sure we’re quite at the stage of a diplomatic incident just yet, the US is known for pressuring other governments – Australia’s included – to beef up their intellectual property regimes in order to secure favourable trade terms. This is of potential concern for Australians, given that studio lobbyists seem to have an disproportionate influence on US lawmakers, resulting in over-enthusiastic regulatory attempts (SOPA being a good example of this, as discussed in an earlier post).

Meanwhile, later in the same article the Australian Federation Against Copyright Theft (AFACT) alludes to surveys showing that people pirate content “because it was free”. While naturally cynical about such citation-free references, I also think this is an overly simplistic assessment.

A better explanation for the piratical proclivities of audiences can be found in the lack of widespread alternatives to the appointment-to-view model of traditional broadcast, especially in Australia. Afraid of cannibalising a business model that’s increasingly out of step with audiences, the studios are leaving money on the table by ignoring online distribution channels. Were online alternatives available that were easy to use and worked without fuss across the devices used by consumers, I believe people would pay (within reason) rather than tangle with torrenting, which as a consumer experience leaves much to be desired.

Of course content owners are entitled to make money – why else invest in making content? But there are limits to how long you can ignore your market’s needs and dictate how consumers use your product while still expecting to maintain revenue streams.

Summer holiday television can be pretty dire, so I was almost grateful when the SOPA melodrama broke out while I was back home.

By way of exposition, SOPA (or the Stop Online Piracy Act) is a piece of American legislation aimed at preventing the distribution of pirated content (but also such things as counterfeit drugs). Its key provisions provide for court orders that will prevent search engines from linking to infringing material, require ISPs to block access to infringing sites or prevent online payment processors from handling payments from sites dealing with infringing material. The aim is to combat sites not hosted in the US and therefore out of the reach of current legislation.

Critics claimed that freedom of speech would be adversely effected by “black lists” of sites. There would also be a chilling effect on user-generated content, with sites such as YouTube or WordPress finding themselves blocked for the actions of one of their contributors. An open letter from constitutional academic Laurence Tribe received extensive coverage, particularly his claim that SOPA would “…undermine the openness and free exchange of information at the heart of the Internet.”

Prominent opponents included Google, YouTube and Wikipedia, some of which (Wikipedia being the most notable example) blacked out their sites for a day in protest. Just to add to the drama, Rupert Murdoch very publically screwed up his first attempt at a twitter tirade against President Obama on the subject, directing it instead at Australian telco Optus (ironically not without cause, given my last post). And around one holiday dinner table I was subjected to an emphatic denouncement of all forms of copy protection from a teenaged cousin who opined “information has to be free.”

Here’s part of the reason I think the whole thing got out of hand: the confusion of free speech and information with content. I completely agree with the fundamental importance of free speech and that information needs to be available to all. Wikipedia is an excellent example of the latter – it contains factual scientific, historical and biographic information, all of which is a valuable resource and should be freely available to everyone to promote their understanding of the world around them.

A movie, on the other hand, is a performance comprising various forms of artistic and technical endeavour intended to inform and entertain. That is to say, content. Unless anyone can justify the argument that the contributors to the movie should not be paid for their efforts (slavery springs to mind), the “information must be free” argument does not follow. And while my cousin – an aspiring musician – announced in support of his argument that he didn’t care if he was paid for his own artistic efforts, that doesn’t mean all artists must starve.

I turn to the redoubtable Margaret Thatcher by way of example. The Wikipedia entry contains dates and facts regarding her term as British Prime Minister. Compare this to the recent film TheIron Lady starring Meryl Streep as the eponymous baroness. While it is based on the same dates and facts, it is content – an artistic expression of those dates and facts. Arguing that The Iron Lady should be protected does not mean that the Wikipedia entry will be deleted.

Intellectual property law has long recognised the distinction between information (which is not protected) and expression (which is). What’s new to this debate are the likes of Google, YouTube and Wikipedia – who have built themselves on other people’s content – resorting to oversimplified “slippery-slope” arguments to protect their own operations. The fact that the other side of the debate is being represented by organisations such as the RIAA – whose boneheadedness has made them so deeply unpopular – doesn’t help.

As a content maker, I will not be told that I can do nothing but sit back and watch my work being ripped off. That’s not to say SOPA is the answer, but nor is cloaking piracy in the sacred vestments of free speech.

As the calendar changes over from one year to the next, it’s only natural to look ahead and wonder what the new year is going to bring. My own prediction is that 2012 will be the year for online video. I believe there are a number of reasons why this will be so… I address the first in this entry: shifting audience focus.

It’s being said that audiences are fragmenting – but that’s just how it looks from the perspective of media incumbents. Actually, audiences are diversifying away from content intended for mass audiences towards what best suits their interests. This move away from the mass has been aided and abetted by search and social media; it will be further encouraged by the rise of content curation.

There will continue to be a place for media giants with the institutional access to the famous and powerful they provide. Large advertising deals and syndication payouts will still pay for high-quality production. Sport will always require deep pockets as it is one of the few genres that can reliably attract large numbers of eyeballs.

However, despite the advantages of their incumbency, media giants are going to have to work harder to keep smaller audiences. The advertising money derived from mass audiences and readerships is already declining. In print, paywalls are being thrown up but the realisation is dawning that audiences will only reliably pay for content that is valuable to them. Media outlets geared to producing generic content for mass consumption are proving ill-equipped to provide this value.

Now is the time for content makers to target audiences directly – by giving them exactly what they want, when they want it.

Sharpening Focus

The key to success in any business is a steady and growing customer base. This is no different for media and has been well understood in both broadcast and print environments, which require an audience that comes back every month, every week or every day to the next episode or edition.

One of the early implications of the shift online is that broadcasters are finding that their own brand is becoming less relevant. Audiences can go directly to the studio or the home network (or even worse, to torrents) to get the content they’re looking for. Thanks to search and social media, what has been traditionally considered a ‘sub-brand’ – the show’s name – is now the main brand. That’s what everyone is talking about and searching for. This is a problem for studios looking for the security of big syndication payouts (where the risk of the success of the series in a given market is passed to the broadcaster). However, it creates opportunities for producers prepared to focus on creating content for that has real value for a particular audience.

A similar situation is faced by traditional print businesses, but they have more potential to salvage the situation. Readers can now go online to any news site (or, typically multiple sites) that takes their fancy. So the question becomes, what is it that takes the reader’s fancy? News websites all carry pretty much the same core news, so what counts in attracting and retaining readers is how the tone and context provided fits with the reader – both in the writing itself and the op-ed content. The masthead brand embodies that tone and context and so retains value – for now.

How well print adapts to the online media environment will be key to their success here. Analysis and op-ed provides the tone and context that the reader is looking for and video has a valuable role in this kind of delivery. Audiences get more from an interview by seeing the subject sweat or squirm than by reading a transcript, for example.

Whether as print or video (but particularly video), this kind of content tends to be personality driven. We see it right now in the op-ed columns of newspapers, while even in the relatively dry area of economic analysis, Alan Kohler attracts dedicated audiences in both print and TV. These personalities become sub-brands, which if managed well offer the opportunity to build an audience and even reach beyond the home website into other platforms and new audiences. Alternatively, the sub-brand becomes poses the same threat in news as it does broadcast – it becomes the audience’s focus. Again, there are opportunities for competition as audiences increasingly go directly to the source.

If Content is King, Its Crown is Audience Value

Moving beyond the mass and attracting audiences by more closely meeting their interests inevitably means smaller audiences. This doesn’t sit well alongside the cost and complexity of production and distribution, factors cited as the main reason more targeted content will struggle to succeed. (That both cost and complexity have been dropping rapidly is a subject I intended to address in a future entry).

And yet content that is more engaging to its audience can more realistically expect to attract subscription revenue from that audience. If an individual audience member is worth ten dollars a month as a subscriber rather than forty cents an episode as eyeballs for advertisers, audiences in the tens or hundreds of thousands (rather than millions) become viable.

This entry has focussed on only one facet of a broad trend (future entries will seek to balance this). The shift in audience focus has been fueled by a diversification of distribution platforms – notably mobile and tablet form-factors – and a move from broadcast to on-demand delivery. IPTV services will continue this diversification, encouraged by the launch of the NBN. However, a look at the sort of content audiences will be seeking in this shifting environment seemed an obvious place to start.

The SMH has an interesting article about an imminent ruling concerning digital rights for footy video. It seems Optus is recording free-to-air sports broadcasts and then streaming the recordings to subscriber’s mobile phones, purportedly exercising the Copyright Act’s ‘timeshifting’ right on behalf of their customers. In reality, they’re directly undercutting the digital rights Telstra paid so handsomely for.

This is something I researched at law school, as back then it was by no means obvious how existing copyright legislation would apply in a convergent media world. I’m not sure how much has changed. A lot of what is currently assumed to be law, especially around free use, is actually just industry convention and untested in court. All it takes is for one player to adopt a more creative approach to digital rights and the whole house of cards could come crashing down.

I don’t think there’s any danger of that here – the approach Optus has taken seems too clever by half. It would have some interesting implications for the likes of ABC’s iView though, which could avoid extra payments to license broadcast content for the online catchup service under the guise of timeshifting.

UPDATE: It turns out Justice Rares in the Federal Court appreciates a cunning plan when he sees one, and has ruled in favour of Optus. With hundreds of millions at stake for sporting codes, an appeal is expected, although as I suggested in my orginal post, the judgement has a potential impact much wider than just sports content.